M J Ó L K U R S A M S A L A N

– M S I C E L A N D D A I R I E S

QualityWe produce dairy products that are in a classof their own.

ReliabilityWe go out of our way to nurture and developconfidence in our products.

ServiceWe are committed to providing our customers with services that are innovative, diverse and of the highest quality.

Provenance Our roots are in the Icelandic countryside, surrounded by unspoilt nature.

Professionalism Our intention is always to fulfil customer demands and expectations by maintaining high standards and professional working practices.

IntegrityWe are honest and trustworthy, and we hope that reflects clearly in the way we operate.

HarmonyWe are a single company and united in everything we do.

FreshnessWe pride ourselves on freshness in all areas of the business – our resourcefulness and creative thinking, as well as our products and customer relations.

Bitruháls 1

Reykjavik, Iceland

Tel.: +354 450 1100

www.ms.is

Icelandic consumers have a greater selection of wholesome dairy products than one

generally finds in some of our neighbouring countries. This stems from the fact that around

700 families throughout Iceland operate cattle farms in harmony with nature and their

communities. They produce a range of goods made from wholesome Icelandic milk for the

company that they own and run together. Icelandic farmers have long had the good fortune

to produce, process and sell their products directly through co-operatives. MS Iceland Dairies

comes directly from that tradition. The company builds on many years of invaluable

experience, which have resulted in an extensive nationwide dairy network and over 300

product lines for homes, workplaces and the catering industry.

One of the strengths of MS Iceland Dairies is that it has always moved with the times and

is quick to react to the needs of the market. In this way, MS and its predecessors have

created an advantageous market position for dairy products to an extent hardly

known in other European countries.

It is no coincidence that Icelanders’ average milk consumption is 60%

more than the European average. This is the result of decades of product

development going hand-in-hand with committed manufacturing and

targeted sales and marketing efforts.

Milk is good!

Einar Sigurðsson

President of MS Iceland Dairies

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A company built on solid foundations, with its roots in the Icelandic countrysideMS Iceland Dairies ehf. is a dairy industry operating company in

Iceland that began operations on 1 January 2007. The company

is owned by Auðhumla (90.1%) and Kaupfélag Skagfirðinga

(Skagafjörður Co-operative Society) (9.9%).

Auðhumla is a co-operative owned by 600 dairy farmers and their

families all over Iceland. The company was created through the

merger of a number of companies within the dairy industry. For

further information, see page 23.

A leading food andbeverage producerMS Iceland Dairies is a leading food and beverage

production company in Iceland. Its role is to use the milk

produced by its owners and transform it into good and

wholesome products that meet the needs of consumers.

MS procedures are characterised by professionalism in

all areas – innovative product development, robust sales

and marketing, and enthusiastic and expert production

knowledge – resulting in popular high-quality goods.

Specialist knowledge in supply chain and delivery

management ensure that people all over Iceland receive

regular and reliable access to a large variety of fresh

dairy products.

The company’s headquarters are at Bitruháls 1 in Reykjavík.

The company operates five production centres, in

Reykjavík, Búðardalur, Akureyri, Egilsstaðir and Selfoss.

The company employs a total of 400 workers.

The annual turnover of MS is approximately ISK 22bn

(for further information see Key figures on page 23).

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The foundation of a healthy diet

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Dairy products have long been an important

part of the Icelandic diet. They are also one of

the foundations of a healthy diet. Milk is the

single most nutritious foodstuff one can

consume. It is an important source of protein

and calcium, as well as the numerous vitamins and

minerals it contains. Scientific research has repeatedly

shown the importance of milk for the growth and

development of bones. New research, moreover, has

also revealed that milk consumption can have positive

effects on weight control.

Innovation andproduct developmentMS has always focused on innovation and product development.

The company launches around 30 new products every year and

is widely recognised as the most innovative company in its field

throughout Iceland.

Diversity is a key factor in the company’s product range. MS

development efforts aim to satisfy consumer needs while taking

into account the dietary guidelines of health authorities. The result

is a broad range of low-fat products, health-promoting bacterial

cultures and ever more convenient packaging. In recent

times, MS has successfully concentrated on increasing its

range of low-sugar products without artificial sweeteners.

Several MS products can be classified as functional foods.

These have been specifically developed to have a

strengthening effect on the body and to work against

environmental factors that can have a negative impact

on health.

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Functional foodsand supplemented goodsFunctional foods have diverse strengthening and positive effects on human well-being and reduce negative environmental impact on health.

Milk-based products The range of MS milk-based products is incredibly diverse and appeals to a broad range of consumers.

Drinks In MS beverages the focus is on wholesome and quality ingredients, essentially milk and fruit.

Plain milk: Whole milk, semi-skimmed milk, skimmed milk, Fjörmjólk (calcium, A and D vitamin fortified milk), Long-life UHT milk.

Other drinks: Skyr drinks, yoghurt drinks,Bíómjólk (mild cultured yoghurt),Kókómjólk (chocolate milk).

Yoghurt, skyr, súrmjólk (buttermilk), Þykkmjólk (creamy yoghurt), Engjaþykkni (twin-pot/muesli yoghurt), Hrísmjólk (creamed rice), cream, crème fraiche, whey, seasonal products.

AB-products, ABT-products, LGG+, LH, Benecol, organic milk, Stoðmjólk (follow-on formula, ready to drink).

A wide range of productsMS provides consumers with fresh and wholesome,

ready-to-use products that meet consumer needs as

regards variety, health and lifestyle.

The MS range includes a broad selection of cheeses,

drinks, milk-based products and butter goods

– a total of over 300 product lines.

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Gott í matinnGott í matinn is a product line based on old

favourites in new and consumer-friendly packaging.

Recipes are included.

Various other goodsMS also offers milk and skimmed milk

powder, as well as a range of goods for

caterers and food manufacturers.

CheesesMS produces a large selection of specially developed cheeses, as well as Icelandic versions of world-famous cheeses.

Butters and spreadsMS aspires to provide consumers with a varied selection ofhigh-quality butter products.

Hard cheese, sliced cheese, fresh cheese, blue cheese, whey cheese, cheesecake, grated cheese, cream cheese, flavoured cheese.

Butter, Smjörvi (butter/vegetable oil blend), garlic/herb flavoured butters, Létt og laggott (light butter/vegetable oil blend).

Products of apristine environment

MS places great importance on providing

consumers with products of the highest

quality, manufactured in harmony with

nature and the environment. Experience and

knowledge, combined with motivation and

initiative, are what make MS the leading food

and beverage manufacturer in Iceland.

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Research has shown that Icelandic milk is among the purest in the

world. Icelandic cows graze on lush pastures and hay, and Iceland is

renowned for its clean and unpolluted environment. Protection of

vegetation and sustainable land use characterise the work of Icelandic

farmers and help to ensure the highest quality.

Strict quality controls are in place throughout the production chain,

from the dairy farm all the way to the consumer, in order to track

quality and ensure food safety. Experts, well-informed employees and,

of course, MS research labs, play a key role in this respect. In addition

to all the employees that carefully monitor quality issues throughout

the production process, there are 18 employees solely engaged in

quality control.

All MS workplaces are under the strict surveillance of the Icelandic

Food and Veterinary Authority. All of them meet European Union

Environmental and quality issuesstandards for export to the EU, and representatives from the EFTA

and EU inspection authorities regularly visit and carry out inspections.

One workplace, MS Akureyri, has secured ISO 9001 quality control

certification on all its products. The company also plans to adopt the

ISO 22000 food safety standard in all its production departments.

MS management are well aware of the environmental impact

associated with the operation of the company and have made

environmental issues one of their top priorities. The company’s goal

is to minimise waste disposal in the environment, reduce energy

consumption and improve the use of raw materials. The design of

packaging is a particularly important aspect, both in terms of materials

that cause the least possible environmental impact and designs which

allow them to stack together easily during transportation.

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Íslenska er okkar mál/Icelandic is our languageSince 1994, MS has applied itself to the promotion of

the Icelandic language on the basis of a partnership

agreement with the Icelandic Language Committee

with the goal of stimulating the debate on the

Icelandic language and promoting knowledge about it.

The campaign’s slogan is Íslenska er okkar mál.

Texts of various types have been published on the

company’s milk cartons for a number of years, as have

suggestions about correct language use, explanations

of folk sayings and beautifully written passages.

MS has also been involved in special projects such as

the poetry website www.jonas.ms.is that was created

to celebrate the bicentenary of the birth of Icelandic

poet Jónas Hallgrímsson in 2007.

Social responsibility

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MS has long placed great importance on supporting

good causes. Its main focus has been on the Icelandic

language, as well as issues that relate to exercise

and a healthy lifestyle.

Current milk carton designAn important part of maintaining the Icelandic

language is the creation of new words and

applying old or obsolete words to new uses in

the fast-changing modern world. The texts

currently on MS cartons illustrate clever

examples of such words. Pictured above are

“Þáþrá” (Nostalgia) and “Spól” (Spinning).

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Annual school visits bring some 3,000 children to MS plants every

autumn to learn more about MS and the entire dairy industry. The annual

International School Milk Day is another important link to schools and

includes a drawing competition. Numerous students and entire classes

receive recognition for their imaginative and beautiful pictures.

Among other projects, it is worth noting that MS works in co-operation

with the Icelandic Osteoporosis Society and the Sports Teachers’ Union

of Iceland. MS co-operates with the Directorate of Health, by printing

messages on its cartons encouraging better health awareness. In addition,

the company supports numerous charities of various types, focusing its

support primarily on sports activities and on encouraging exercise and a

healthy diet.

Step back in timeThe “Rafskinna” was an electronic book that turned its own pages. The book could be seen every Christmas and Easter in the window of Haraldur Árnason’s shop at the corner of Austurstræti and Lækjargata in downtown Reykjavík between 1936 and 1956. The advertisements were created by artists such as Jón Kristinsson from Lambey and Atli Már Árnason, and they created quite a stir when they appeared in this popular advertising spot. The MS gallery at the company’s headquarters at Bitruháls displays several of the advertisements from Rafskinna. The gallery also displays old artefacts and photographs depicting the history of milk production in Iceland.

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ServicesMS is one of the largest distribution companies in Iceland.

Company vehicles annually transport around 120,000 tonnes

of milk from dairy farmers to MS processing plants. MS

products are then distributed to over 3,000 customers all

over Iceland, allowing consumers throughout Iceland equal

access to the company’s goods.

MS focuses on providing excellent services and having

frequent communication with customers. MS staff provide

customers with a range of specialist assistance, from advice

on optimum dimensions for retail refrigerators, to product

presentations, product placement and product solutions for

major users.

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Frequent product introductions give consumers the

opportunity to keep up with MS product developments

and to educate themselves about the properties and

wholesomeness of milk products.

www.ms.isThe MS website, www.ms.is, plays an

important role in providing services to

consumers, including useful information

on nutrition and health. In addition,

the page www.gottimatinn.is has the

largest collection of recipes in Iceland.

Dairy exportsOnly a tiny fraction of international dairy production is exported

between countries. Iceland is no exception to this rule and dairy

exports from Iceland have traditionally been only a means to get rid

of surplus production.

By exporting skyr, MS can achieve a considerably better price for

surplus milk for its owners than if the surplus is exported as powdered

skimmed milk.

Considerable efforts have been made in recent years on increasing exports

of skyr. This thick and creamy dairy product, that is high in protein and

virtually fat free, has been a staple foodstuff of Icelanders since the time of

the early settlers and, until recently, produced only in Iceland.

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Total sales in cups – Scandinavia

30.000.000

25.000.000

20.000.000

15.000.000

10.000.000

5.000.000

02009 2010 2011 2012 2013

In recent years, MS has focused on developing the Nordic market

for skyr. In 2013, skyr was sold in more than 5,000 retail outlets in

the Nordic countries, with sales reaching over 30 million pots valued

at around ISK 5bn. This was achieved through MS exports of skyr

from Iceland to the extent permitted by the quota to Europe. In

addition, MS has sold production franchises to Denmark, Norway

and Sweden. The total sales of skyr to the Nordic countries have

increased more than ten-fold over the past four years. Based on this

great achievement in the Nordic countries, MS has now set its sights

on examining markets in the US, the UK, Switzerland, Germany and

the Faeroe Islands.

The unique characteristics of skyr distinguish it from other

dairy products and it has the potential to create a unique niche

for itself among the diverse dairy products currently available

in international markets. The properties of skyr are eminently

appropriate to the current demands and tastes of consumers,

especially those in Europe and the US, where a large proportion

of them appear to be seeking foodstuffs that are rich in proteins,

fat-free, healthy and tasty. Skyr fits that bill perfectly. Consumer

surveys in those regions would suggest that skyr is an unqualified

success. Skyr manufactured by MS, moreover, has in recent years

garnered numerous awards at the major dairy products trade show

held annually in Herning, Denmark.

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Icelandic skyr penetrates

overseas markets

FinlandPopulation: 5.4 millionSales began: 2009Company: Skyr FinlandSales outlets: 1,000

SwedenPopulation: 9.5 millionSales began: 2012Production permit: Kavli corporationSales outlets: 1,200

NorwayPopulation: 5 millionSales began: 2009Production permit: Kavli corporationSales outlets: 1,500

DenmarkPopulation: 5.4 millionSales began: 2007Production permit: Thise dairySales outlets: 350

MS Reykjavík

MS Reykjavík

Bitruháls 1

110 Reykjavik

Tel.: +354 450 1100

Sales department:

Tel.: +354 450 1111

E-mail: soludeild@ms.is

The headquarters and main offices of MS Icelandic Dairies ehf. are at Bitruháls 1

in Reykjavík. The offices of the Managing Director and the Directors of Finance,

Production and Sales and Marketing, together with their staff, are located here.

MS Reykjavík is responsible for the packing of all bite-size- and sliced cheeses

produced in other MS plants.

The company’s main warehouse is also located in Reykjavík. It contains supplies

of all MS products, including all types of fresh goods, cheese and butter

products, as well as products with a longer shelf-life.

Extensive order preparations are organised from MS Reykjavík and the

continuous distribution of dairy products to the Greater Reykjavík area,

as well as most of Iceland, is organised from the centre.

A total of 170 employees work at MS Reykjavík.

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MS Búðardalur og Egilsstaðir MS Egilsstaðir takes delivery of 7.2 million litres of milk from

36 farmers and is responsible for distribution in the area

between Vopnajörður and Jökulsárlón, as well as transport

between Egilsstaðir and Akureyri. Its main products are

seasoned butters and Mozzarella and Ricotta cheeses.

MS Egilsstaðir has a staff of 12.

MS Búðardalur

Brekkuhvammur 15,

370 Búðardalur

Tel.: +354 450 1100

MS Egilsstaðir

Kaupvangur 39,

700 Egilsstaðirm

Tel.: +354 450 1100

Dairy Manager: Lúðvík Hermannsson. E-mail: ludvikh@ms.is

MS Búðardalur accepts milk from famers in the Dalasýsla and Westfjords

regions (Barðaströnd and Ísafjörður municipalities). In 2013, MS Búðardalur

took delivery of 4.5 million litres from 39 farmers.

The plant’s equipment for making soft cheese and blue cheeses was redesigned

and improved in 2007 to provide the same quality production with higher

capacity. All MS blue cheeses are now produced in MS Búðardalur, along with

specialist cheeses such as Cheddar, Havarti and Feta cheese. The plant is also

responsible for the manufacture of LGG+ and Benecol.

There is a research lab on site. The plant fulfils the strictest

production quality criteria and all its equipment is in

exemplary condition. Its products have received countless

acknowledgements, both in Iceland and overseas.

MS Búðardalur has a staff of 22.

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MS AkureyriMS Akureyri takes delivery of milk from dairy

farmers in the Húnavatnssýsla, Eyjafjarðar and

S-Þingeyjarsýsla regions. The operation is divided

between milk transport; butter, yoghurt and

súrmjólk (buttermilk) production; milk bottling

and cheese manufacture (hard cheeses, speciality

cheeses, whey cheese, Kotasæla and cheese

spreads). In addition, the plant at Akureyri produces

a range of ready-made dishes, such as Hrísmjólk,

Grjónagrautur (a milk-based rice pudding), cheese

cakes, non-sweetened skyr and Smámál (snack).

The production in Akureyri is, therefore, extremely

varied and constantly evolving, as technological

changes in the industry are quite rapid. A new high-

tech cheese maker was formally brought on-line

in 2013. MS Akureyri processes approximately 38

million litres of milk per year, from 209 farmers.

The majority of the milk, 60-65%, is used for making

cheese. All whey, produced as a by-product, is put

through a machine that filters out dry matter, which

is then used again in the production process.

MS Akureyri is responsible for sales in north and

east Iceland in the area from Hrútafjörður to

Jökulárlón, and it distributes goods throughout

North Iceland. MS Akureyri also operates a

maintenance department, a quality control

department and a research laboratory. It employs

a total of 85 members of staff and holds ISO 9001

quality certification.

MS Akureyri

Súluvegur 1

600 Akureyri

Tel.: +354 450 1100

Akureyri Sales Department:

Tel.: +354 450 1110

Dairy Manager:

Kristín Halldórsdóttir

E-mail: kristinh@ms.is

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MS Selfoss MS Selfoss is the single largest production

facility within MS. The milk collection area of

MS Selfoss reaches from Snæfellsnes in the west

to Skeiðarársandur in the east. MS Selfoss takes

delivery of just under 61.5 million litres of milk from

321 farmers, half of all milk production in Iceland.

Its main tasks include carton packaged liquid milk

products and the manufacture of various types of

fermented milk goods. The making of skyr is an

important aspect of the centre’s operation, as is the

production of drinks, such as Kókomjólk (chocolate

milk), made from various types of long-life UHT milk.

Butter and other spreads also form a large part of

production, along with powdered milk.

The plant is well equipped, high-tech and flexible.

It receives approximately 1,440 tonnes of

packaging, fruit compounds and various other

production materials annually. MS Selfoss also

operates a maintenance department, research

laboratory and quality control department.

Transport operations involve the collection

of milk, distribution in southern Iceland

and transportation of products

to Reykjavík.

A total of 100 employees work

at MS Selfoss.

MS Selfoss

Austurvegur 65

800 Selfoss

Tel.: +354 450 1100

Dairy Manager:

Gudmundur Geir Gunnarsson

E-mail: gudmundurg@ms.is

MS Organisational ChartWorkforce

The goal of MS is to employ competent and

motivated personnel who have the knowledge

and skills needed for the positions they hold. The

company puts great importance on teamwork and

unity, as well as a good and stimulating working

environment. It is important that staff are given

the opportunity to grow and develop in their

work and that they are encouraged to improve

their skills in tune with the demands made of the

company. A strong information network within

the company supports a good atmosphere and

synergy among the entire team.

Board of Directors

PresidentEinar Sigurðsson

FinanceKristján Björgvinsson • Accounting / finances

• IT

• Human Resources

ProductionPálmi Vilhjálmsson

• Production Plant Management

• Process Control

• Transport and Distribution

Sales and marketingJón Axel Pétursson

• Sales and Marketing

• Product Development and Consumer Services

• Exports

Auðhumla svf.ForstjóriEinar Sigurðsson

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• Number of locations: 5

• Employees: 400

• Owners: 600 dairy farmers throughout Iceland (within Auðhumla)

• Annual turnover: ISK 22bn

• Equity: ISK 3.8bn

• Total volume of milk processed in Iceland: 123 million litres

• Total goods produced:

– fresh goods: 48.9 million litres

– cheeses / butter goods: 8.5 million kg

• Milk consumed: 93.5 litres

• Fresh goods (all): 149 litres

• Cheeses / butter goods: 26 kg

2013figures

Consumption figure per capita 2013

• Mjólkursamsalan í Reykjavík was founded in 1935. In 2005 it merged with Mjólkurbú Floamanna under the name of Mjólkursamsalan (MS Iceland Dairy).

• Mjólkurbú Flóamana á Selfossi was founded on 5 December 1929. In 2005 it merged with Mjólkursamsalan í Reykjavík to form Mjólkursamsalan (MS Iceland Dairy).

• Mjólkursamsalan í Reykjavík began the operation of Mjólkursamlagið í Búðardal in 1964. In Ísafjörður, milk processing began in 1937 and was operated by Kaupfélag Ísfirðinga. Mjólkursamlag Ísfirðinga was founded in 1964 and was later sold to MS Iceland Dairy in 2006.

• Mjólkursamlag KEA was established on 4 September 1927 and in 2000 the dairy processing company Norðurmjólk ehf. was founded. This company was created via the merger of dairy co-operatives in Akureyri, Húsavík and Grani, a private limited company owned by farmers in the area.

• MS and S.Í.S. established the Osta- og smjörsalan on 19 February 1958. Its members were all of the dairy co-operatives in Iceland.

Mjólkursamsalan ehf. – MS Iceland Dairies ehf. is the operating company for the dairy industry in Iceland, established on 1 January 2007. The company was created through the merger of a number of companies (specified below) within the dairy industry.

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MS Iceland Dairies, May 2014.Design: Hvíta húsið.Printing: Prentmet.Photographs: Gunnar Svanberg: Front page, pages 5, 6, 15 l.h. and 16 l.h.Bernhard Kristinn: pages 3, 7, 11 r.h., 26 r.h, packaging photos pages 8-9 and 18-21..Lárus Karl: pages 2, 21 r.h. og 26 l.h.Sigurður Stefán Jónsson: pages. 4 r.h. and 19.Kristján Pétur: pages 4 l.h and 10 (cowshed).Hvíta húsið: packaging pages 6 and 16.iStockphoto: pages 8 and 27. Getty Images: page 14. Hugi Ólafsson: page 10 l.h.MS: pages. 13 and 15 r.h. Mats Wibe Lund: page 18. Nordic Photos / Pálmi G.: page 10 l.h.Ragnar Th.: page 10 r.h. Rúnar Þór: page 20. Skarphéðinn Þráinsson: back page.

M J Ó L K U R S A M S A L A N

– M S I C E L A N D D A I R I E S